Silver’s spectacular surge: Short-term dip ahead, long-term rally likely

Silver has dazzled investors and festive buyers alike, soaring nearly 100% in India this year. From ₹1,100 per 10-gram coin last Dhanteras to ₹1,950 in 2025, the metal’s meteoric rise has outpaced gold’s 55–60% gains, fueled by a mix of industrial demand, geopolitical uncertainty, and seasonal buying ahead of Diwali.

On October 15, silver touched ₹1.89 lakh per kg in Delhi, Kolkata, and Mumbai, and crossed the ₹2 lakh mark in Chennai — a jump of ₹6,000 in just 24 hours — underscoring a four-month rally that has left many investors wondering: will the shine fade?

Why silver has skyrocketed

The surge stems from multiple factors: bullish futures trading on the Multi Commodity Exchange (MCX), global shortages as old stocks dwindle, and industrial demand from electric vehicles, solar panels, and semiconductors. Silver is also serving as a safe haven amid conflicts in Ukraine and the Middle East, while domestic festive and wedding-season purchases have pushed prices higher.

Mumbai jeweller Jitendra Kumar notes, “Those buying silver for weddings are actively purchasing, while others are waiting for a correction.”

Experts warn of a short-term correction

Analysts caution that silver could pull back after Diwali. Renisha Chainani, head of research at Augmont, told India Today Digital, “This volatility is likely to ease post-festive demand, as premiums compress and arbitrage returns.”

Jigar Trivedi, senior analyst at Reliance Securities, added, “Given the sharp rally, technical correction is possible. A stronger US dollar, profit-taking, easing global tensions, or supply releases could drag prices down 10–20%.” Already, silver ETFs have seen outflows of 12 million ounces in October, adding pressure.

Motilal Oswal Financial Services Limited (MOFSL) projects short-term consolidation around $50–55 per ounce but retains a bullish long-term outlook, with silver potentially hitting $77 per ounce by 2027 (₹2.46 lakh per kg).

Industrial demand keeps the bull case alive

Unlike previous rallies in 1980, 2011, or 2021—which were largely speculative—the current surge is grounded in real demand. The transition to green energy, electronics, and EVs provides a structural base for silver, with a projected global deficit of 150 million ounces annually through 2027.

Trivedi explained, “Industrial and structural demand is driving the rally, but retail investor sentiment accounted for 60–70% of the price spike.” Chainani cautioned, “Silver is overvalued now, and a post-festive dip may prevent a bubble, but long-term fundamentals remain strong.”

Bottom line for buyers

In the short term, silver prices in India are likely to ease after Diwali, potentially dropping 10–20%. But the ongoing global shortage and rising industrial applications suggest the metal’s long-term trajectory remains upward, making it a potentially lucrative investment for those thinking beyond immediate gains.